Barclays Global Investors, the asset management arm of UK bank Barclays, has launched a new range of Credit Selection funds aimed at ultra high net worth investors.

The Credit Selection funds have been developed to meet sustained demand for corporate bonds and the address the heightened risk aversion arising from the financial crisis, BGI said in a statement.

The funds utilise a “smart beta” process which identifies companies which are at risk of potential defaults/downgrades and spots outperformers – an investment process which BGI said has been exceptionally accurate in singling out “fallen angels.”

BGI is of the view that by maintaining their exposure to corporate bonds, but with fallen angels having been screened out, investors can start to start to reposition themselves to take on more risk in their bond portfolios. The firm believes that the funds provide investors with a new, different and risk-conscious way to tap into investment opportunities.

The BGI Credit Selection funds are designed to outperform their respective benchmark indices by 0.30 per cent per annum (before investment management fees) in stable or improving credit markets, but with the potential to outperform considerably in deteriorating credit markets.

The funds are denominated in sterling, dollar and euros, and are structured both with duration (credit and interest rate risk) and without duration (credit risk only as interest rate duration will be hedged). The funds deal on a daily basis.